February is on track to be a record setting month for dividends. Companies have already doled out over $45 billion in cash payments and that number is expected to go even higher, according to Howard Silverblatt, senior index analyst, S&P Dow Jones Indices.
Walmart (WMT), the world’s largest retailer may be next to join the party when it reports earnings on February 19th. “We expect increases,” says Silverblatt who also notes the retailer is a Dividend Aristocrat (^SPDAUDP), a company with a 25 year history or more of raising dividends. “These companies, its part of their culture, they’ve got the cash, they’ve got the ability.” Last February Walmart raised its dividend in tandem with quarterly results.
Related: S&P 500 Dividend Aristocrats
February through March is historically the busiest time of the year for dividend increases and this may be the season financial companies win back their spot as the market’s biggest payers, after being deciminated in the aftermath of the global financial crisis. “The financials are a lot more secure than seven years ago,” observes Silverblatt. “The earnings, the cash flow are good and the willingness of the companies to increase the dividends are there as well.” One company on Silverblatt’s watch list; T. Rowe Price Group (TROW). Last year the company raised its dividend on February 19th.
Next month, we may hear dividend updates from the nation’s biggest banks such as J.P. Morgan (JPM) and Citigroup (C). The banks, which still need approval from the Federal Reserve on dividend and buyback plans, typically get a response in March.
Currently financials are the second biggest payers of dividends within the S&P representing about 14.7%, based on data from S&P Dow Jones Indices. That’s still a far cry from the 30% the group paid pre-financial crisis. Technology is in the top spot with payouts representing nearly 15%.
Numbers aside, rising dividends are a sign that business is growing and that is bullish for the S&P 500 (^GSPC) if the trend can continue.